No. of Recommendations: 3
Geek note, QQQ isn't cap weighted. It has its own unique weighting formula, and the difference is material.I think QQQ weighting matches NDX weighting within fairly tight limits which are set out in the prospectus.
The weighting in the index is modified to reduce the weighting of a stock if it exceeds a certain limit, or a group of stocks weighting can be reduced if their aggregate weighting exceeds a certain amount.
The adjustments push (slightly)QQQ towards QQQE weighting
https://connect.rightprospectus.com/Invesco/TVT/46... Rebalancing of the Index
The Index is calculated using a “modified market capitalization-weighted”
methodology, which is a hybrid between equal weighting and conventional
capitalization weighting. This methodology is expected to: (1) retain in general the
economic attributes of capitalization weighting; (2) promote portfolio weight
diversification (thereby limiting domination of the Index by a few large stocks);
(3) reduce Index performance distortion by preserving the capitalization ranking of
companies; and (4) reduce market impact on the smallest Index Securities from
necessary weight rebalancings.
Aussi